A year-long drought that destroys most of the summer's crops would be considered a:
A. short-run supply shock.
B. long-run demand shock.
C. long-run supply shock.
D. short-run demand shock.
Answer: A
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If the central bank pursues a monetary policy that is more expansionary than what firms and people expect, then the central bank must be trying to
A) boost output in the short run. B) constrain output in the short run. C) constrain prices. D) boost prices in the short run.
Demand-pull inflation is caused by: a. an increase in aggregate demand
b. a decrease in aggregate demand. c. an increase in short-run aggregate supply. d. a decrease in short-run aggregate supply.
Economists refer to the relationship that a higher price leads to a lower quantity demanded as the _____________.
a. income gap b. market equilibrium c. law of demand d. price model
The reward that lenders of loanable funds receive for delaying consumption and supplying loanable funds to the loanable funds market is called the
a. marginal factor cost b. loanable funds c. wage-related rent d. interest rate e. marginal revenue product